The 49th GST Council Meeting was held on February 18th, 2023 in New Delhi under the Chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman. The meeting was also attended by Union Minister of State for Finance Shri Pankaj Chaudhary besides Finance Ministers of States & UTs (with legislature) and senior officers of the Ministry of Finance & States/ UTs.
This is the first GST council meeting after the Union Budget 2023, all the decisions taken by the GST Council have a far-reaching impact on the economy and the taxpayers. The last meeting i.e. the 48th GST Council Meeting was held in December 2022.
In this article, we will discuss key highlights from the 49th GST Council meeting.
49th GST Council Meeting Key Highlights
GST Compensation Cess
The government decided to clear the entire pending balance GST compensation cess of Rs. 16,982 crores for June’2022. Since there is no amount in the GST compensation Fund, the Centre decided to release this amount from its own resources and the same will be recouped from the future compensation cess collection. With this release, Centre would clear the entire provisionally admissible compensation due for five years as envisaged in the GST (Compensation to States) Act 2017.
GST Appellate Tribunal
As the experts expected and presumed, the GST council adopted the report of the Group of Ministers with certain modifications. The final draft amendments to the GST laws shall be circulated to Members for their comments. The Chairperson has been authorised to finalise the same. The GoM on Goods and Services Tax Appellate Tribunals (GSTATs) was set up in July last year under the chairmanship of Haryana deputy chief minister Dushyant Chautala.
Capacity Based Taxation & Special Composition Scheme in certain Sectors
With a view to plug the leakages and improve the revenue collection from the commodities like pan masala, gutkha, chewing tobacco, the Council approved the recommendations of the GoM including:
- the capacity-based levy not to be prescribed;
- compliance and tracking measures to be taken to plug leakages/evasions;
- exports of such commodities to be allowed only against LUT with consequential refund of accumulated ITC;
- compensation cess levied on such commodities to be changed from ad valorem to specific tax based levy to boost the first stage collection of the revenue
As expected, the GST Rates on certain commodities have undergone changes.’Rab’ has been changed from 18% to 5% if sold packed and labelled but if sold otherwise, there will be NIL GST. And for pencil sharpeners, GST has been reduced from 18% to 12%.
Extension of time limit for application for revocation of cancellation of registration and one-time amnesty for past cases:
The Council has recommended amendment in section 30 of CGST Act, 2017 and rule 23 of CGST Rules, 2017 so as to provide that –
- the time limit for making an application for revocation of cancellation of registration be increased from 30 days to 90 days;
- The Council has also recommended that an amnesty may be provided in the past cases, where registration has been cancelled on account of non-filing of the returns, but the application for revocation of cancellation of registration could not be filed within the time specified in section 30 of CGST Act, by allowing such persons to file such application for revocation by a specified date, subject to certain conditions.
- Amendment to Section 62 of CGST Act, 2017 to extend timelines under sub-section (2) thereof and one time amnesty for past cases: As per sub-section (2) of section 62 of CGST Act, 2017, the best judgment assessment order issued under sub-section (1) of the said section is deemed to be withdrawn if the relevant return is filed within 30 days of service of the said assessment order.
- The Council recommended to amend section 62 so as to increase the time period for filing of return for enabling deemed withdrawal of such best judgment assessment order, from the present 30 days to 60 days, extendable by another 60 days, subject to certain conditions.
- The Council has also recommended to provide an amnesty scheme for conditional deemed withdrawal of assessment orders in past cases where the concerned return could not be filed within 30 days of the assessment order but has been filed along with due interest and late fee upto a specified date, irrespective of whether appeal has been filed or not against the assessment order, or whether the said appeal has been decided or not.
Other GST Changes
- It was decided to suitably amend notification No. 104/94-Customs dated 16.03.1994 so that if a device like tag- tracking device or data logger is already affixed on a container, no separate IGST shall be levied on such affixed device and the ‘nil’ IGST treatment available for the containers under notification No. 104/94-Customs shall also be available to such affixed device subject to the existing conditions.
- It has been decided to amend the entry at Sl. No. 41A of notification No. 1/2017-Compensation Cess (Rate) so that exemption benefit covers both coal rejects supplied to and by a coal washery, arising out of coal on which compensation cess has been paid and no input tax credit thereof has been availed by any person.
- It has been decided to extend the exemption available to educational institutions and Central and State educational boards for conduct of entrance examinations to any authority, board or a body set up by the Central Government or State Government including the National Testing Agency for conduct of entrance examinations for admission to educational institutions.
- It has been decided to extend the dispensation available to Central Government, State Governments, Parliament and State Legislatures with regard to payment of GST under reverse charge mechanism (RCM) to the Courts and Tribunals also in respect of taxable services supplied by them such as renting of premises to telecommunication companies for installation of towers, renting of chamber to lawyers etc.
- Amnesty in respect of pending returns in FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10: To provide relief to a large number of taxpayers, the Council recommended amnesty schemes in respect of pending returns in FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10 by way of conditional waiver/ reduction of late fee.
- Rationalization of provision of place of supply of services of transportation of goods: Council recommended to rationalize the provision of place of supply for services of transportation of goods by deletion of section 13(9) of IGST Act, 2017 so as to provide that the place of supply of services of transportation of goods, in cases where location of supplier of services or location of the recipient of services is outside India, shall be the location of the recipient of services.
49th GST Council Meeting Expectations
The taxation of “pan masala” and “gutka” enterprises is probably going to be a topic of debate at the 49th GST council meeting. In addition, discussions over GST on horse racing, casinos, and online gaming may occur. In its initial report, the committee suggested that the GST rate for casinos, online gaming, and horse racing be set at 28%. The base value for taxation was also noted in the report. Currently, there are two distinct GST rates for online gaming: 18% for skill games without betting and 28% for games of chance including betting and gambling.
Also, according to the demands of many insurers, the GST on health insurance and several types of life insurance must be lowered. It lowers the premium fee and makes health insurance more affordable for policyholders.
GST on Electric Vehicles
Several business organizations urged the finance ministry to lower tax rates on a number of items before the Budget 2023. The industry anticipates a rate reduction on one of the well-liked items, the input used in Electric Vehicles (EV), whose input is lithium-ion battery cells and packs, to 5% from the current rate of 18%. The action will promote domestic EV production and increased consumption in India.
Read: Key GST Changes: Union Budget 2023 | Finance Bill 2023
Given the increased number of disagreement cases and GST litigation, the government is prepared to speed up the creation of GST Appellate Tribunals (GSTAT), sources suggest. A large number of cases are still waiting in high courts as a result of the absence of GST Appellate Tribunals (GSTATs). The upcoming 49th GST Council meeting should quickly reach a decision on the creation of GSTATs, which the finance ministry is proposing. The objective is for all states to have appellate tribunals for the swift resolution of GST disputes.
Input Tax Credit
According to tax experts, the accumulation of ITC as a result of the inverted duty structure in the textiles sector is an older issue that might be resolved by either harmonizing the input or output GST rates or by allowing the industry to request claiming the accumulated ITC.
Inverted Duty Structure on Textile and other industries
Inverted tax structure continues to be a problem for the textile industry. The fabric is subject to 5% GST, 12% GST on yarn, and 18% GST on polyester chips. According to experts, the government has to establish a single tax rate for the entire range of textile products. Although, the inverted duty structure is a long pending issue, and no timetable has been provided for its reversal.
There are talks going around regarding the 49th GST Council Meeting being postponed to a later date. However, no official announcement has been made about the same. Stay tuned to this space and we will keep you updated with the latest happenings on the GST Council Meeting front. We will also post the highlights from the 49th GST Council Meeting on this page!
You can find the highlights of the past GST council meetings here –
- 48th GST Council Meeting
- 47th GST Council Meeting
- 46th GST Council Meeting
- 45th GST Council Meeting
- 44th GST Council Meeting
- 43rd GST Council Meeting
- 42nd GST Council Meeting
- 41st GST Council Meeting
- 40th GST Council Meeting
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